Order under section 119 for waiver on levy of interest

Order under section 119 of the Income-tax Act, 1961 for waiver on levy of interest under section 201(1A)(ii)/ 206C(7) of the Act, as the case maybe, in specific cases -regarding.

Section 201(1A) of the Income-tax Act (hereinafter “the Act”) provides for levy of interest on account of failure to deduct or pay the deducted tax to the credit of the Central Government by the deductor. Further, section 206C(7) of the Act provides for levy of interest on account of failure to collect or pay the collected tax to the credit of the Central Government by the collector. .

2. Representations have been received by the Central Board of Direct Taxes (hereinafter “the Board”) that while making payments of taxes deducted at source (TDS) and taxes collected at source (TCS) to the credit of the Central Government as per section 200 and 206C of the Act, the taxpayers have encountered technical glitches. On account of such glitches, while the payment is initiated by the taxpayers/ deductors/ collectors and the amounts are debited from their bank accounts on or before the due date, the actual credit to the Central Government is done after the due date. In such cases, notices have been received by such taxpayers for levy of interest under section 201(1A)(ii)/ 206C(7) of the Act, as the case maybe.
   
3. In exercise of the powers under section 119 of the Act, the Board, hereby directs that the Chief Conmlissioner of Income-tax (CCIT) or Director General of Income-tax (DGIT) [or in case there is no CCIT and DGIT, then Principal Chief Commissioner of Income-tax (PrCCIT) may reduce or waive interest charged under section 201(1A)(ii) / 206C(7) of the Act in the class of cases where-
   • the payment is initiated by the taxpayers/ deductorsl collectors and the amounts are debited from their bank accounts on or before the due date, and
   • the tax could not be credited to the Central Government, before due date because of technical problems, beyond the control of the taxpayer/ deductor / collector.
     
4. The CClT or DGIT or PrCClT, as the case maybe, examining an application for waiver of interest under this order shall pass a speaking order after providing adequate opportunity of being heard to the applicant and after verification of technical glitches from the bank/Directorate of Systems.
   
5. Even if the interest under section 201(1A)(ii)/ 206C(7) of the Act has already been paid by the taxpayer, the same can be considered for waiver and a refund maybe given to the deductor, if waiver is ordered.

6. No waiver application shall be entertained beyond one year from the end of the financial year for which the interest under section 201(1A)(ii)/ 206C(7) of the Act is charged.
   
7. An application received for waiver of interest under section 201(1A)(ii)/ 206C(7) of the Act shall be disposed of within a period of six months from the end of the month in which such application is received.
   
8. The order issued by the CCIT or DGIT or PrCCIT, as the case maybe, shall be final and no petition against that order shall be entertained by the Board.

Summary

The order under Section 119 of the Income-tax Act, 1961, allows for the waiver of interest levied under Section 201(1A)(ii) and Section 206C(7) in specific cases where taxpayers face technical issues while making TDS/TCS payments.

Key points:

1. Interest Liability: Sections 201(1A) and 206C(7) impose interest on failure to deduct, collect, or pay TDS/TCS to the Central Government on time.
2. Technical Glitches: Taxpayers reported issues where payments were initiated on time, but delays in crediting the government occurred due to technical glitches.
3. Waiver Eligibility: Interest may be waived if:
   • Payment was initiated, and the amount was debited before the due date.
   • The delay was due to uncontrollable technical issues.
4. Decision Authority: The Chief Commissioner (CCIT), Director General (DGIT), or Principal Chief Commissioner (PrCCIT) can approve waivers after verifying technical issues.
5. Refund Eligibility: If interest was already paid, it can be refunded upon waiver approval.
6. Time Limit: Waiver applications must be filed within one year from the financial year’s end.
7. Processing Timeline: Applications must be resolved within six months.
8. Finality: The decision by the CCIT, DGIT, or PrCCIT is final, with no further appeal to the Board.

This order provides relief to taxpayers affected by technical failures while ensuring timely resolution of waiver requests.

Circular No. 5/2025

Also Read:

1. Recommendations of the 55th Meeting of the GST Council
2. Changes in GST and Income Tax during the Financial Year 2024-25
3. TDS and TCS provisions applicable from April 1, 2025
4. Rationalizing TDS: A Deep Dive into Budget 2025’s Proposals

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